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The Safest Way to Play LNG Exports

Terminal facilities and LNG vessels aren't the only ways to profit from the LNG exports surge.

Several LNG export terminal projects are planned to allow companies to profit from new markets, thus increasing the potential profit they could generate. However, to make LNG exports a reality, infrastructure is needed more than ever in order to build the required facilities and provide them with the necessary equipment. Therefore, besides investing in terminals or in shipping companies that will deliver the commodity, some companies are specializing in LNG infrastructure and are already profiting from this surge.

At the heart of LNG exportsMy first specialized company is the leading manufacturer of engineered products and systems for cryogenic and heat transfer applications. Chart Industries(NASDAQ:GTLS) is also one of the leading suppliers of LNG equipment worldwide.

As a matter of fact, its cryogenic process design and system fabrication experience dates back to the 1950's, and its developed expertise led the company to focus on cryogenic hydrocarbon processing applications to target markets including LNG, NGL, hydrogen and other specialty cryogenic separation and recovery systems. Chart is also a world leader in the conception and manufacturing of critical cryogenic gas processing equipment, including brazed aluminum heat exchangers and air-cooled heat exchangers.

On July 30, the company announced that Noble Energy had awarded Chart a contract to provide a processing facility in order to produce approximately 100,000 gallons of LNG on a daily basis. The facility, to be located in Weld County, Colorado, will be fully integrated with a new gas processing plant. The plant is expected to be commissioned by the end of 2014 and will service Noble Energy's operations in the DJ Basin.

Furthermore, two months later, Chart announced yet another contract, with Stabilis FHR Oilfield LNG, a joint-venture between Stabilis Energy and Flint Hills Resources. Chart would provide a standard liquefaction plant designed to produce 100,000 gallons of LNG per day for oilfield fuel applications in the Eagle Ford Shale. The plant is planned to be located in George West, Texas and is expected to be commissioned in January 2015.

My second favorite, set for a big profit with the LNG exports surge is Chicago Bridge & Iron(NYSE:CBI), one of the most complete energy infrastructure companies in the world. For more than 50 years, the company provides a variety of services, including design, engineering, construction, manufacturing and maintenance services. Chicago Bridge & Iron has developed an expertise that makes it the envy of its competitors, building the first LNG regasification import terminal in the U.S.

The company, after being selected by AES to build the first Dominican Republic LNG import terminal, managed to commission the project after only 25 months. The terminal has been designed to receive LNG from ships with rated storage capacities ranging from 1.24 Mmcf to 5.12 Mmcf.

Chicago Bridge & Iron has more than $25.5 billion in committed contracts, with about 55% awarded to LNG infrastructure, gas processing, and petrochemical equipment as well as government power facilities and offshore structures.

The last specialized company I want to take a look at it is KBR(NYSE:KBR). The company proposes a wide array of services that ranges from hydrocarbons, mining and minerals, to civil and military infrastructures. KBR developed its expertise since 1976 in many countries, achieving the first modular LNG plant design in Western Australia for Woodside Petroleum, the first liquefaction train, and the first large-scale gas turbine plant.

KBR has a contract backlog of more than $13.8 billion, including the announced Kitimat LNG project for front end engineering and design (FEED) of the planned export facility on British Columbia's West Coast as well as the Pacific NorthWest LNG project, a subsidiary of PETRONAS and Japan Petroleum Exploration, to achieve the FEED and detailed engineering work for the LNG export terminal located in Lelu Island near Prince Rupert, British Columbia.

Foolish bottom lineInvesting in specialized LNG infrastructure companies may be the safest way to play the LNG exports, because facilities and equipment are the first components needed to start exporting the commodity. Furthermore, many contracts awarded are partially paid with lump sums by the importing and exporting companies before starting on-site construction.

Since many companies are getting more than ever into import and export activities, only a few specialized infrastructure companies possess all the expertise needed to profit from the LNG's surge, whether the operational activities are located in the U.S. or abroad.

Author

Stephan is a Canadian private investor specializing in energy stocks. Monitoring a few of them and digging out some great gems along the way provides a personal insight for American and Canadian investors.